23316 Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 

17See ISE Rule 1902. Specifically, ISE is a 

participant in the Options Order Protection and 

Locked/Crossed Market Plan. 

18 17 CFR 242.600. 

19See ISE Rule 502(a)–(b). 

20See ISE Rules 412 and 414. 

21See ISE Rule 1202. See also FINRA Rule 

2360(b) and Commentary .01 to FINRA Rule 2360. 

22 15 U.S.C. 78s(b)(2). 

23 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61510 

(February 5, 2010), 75 FR 7530 (‘‘Notice’’). 

4Amendment No. 2 reflects changes to FINRA 

Rule 6635 that were made in SR–FINRA–2010–002, 

which was filed with the Commission for 

immediate effectiveness on January 14, 2010. See 

Securities Exchange Act Release No. 61427 (January 

27, 2010), 75 FR 5834 (February 4, 2010). 

5 17 CFR 230.144A. 

6See Securities Act Release No. 6862 (April 23, 

1990), 55 FR 17933 (April 30, 1990). For the 

purpose of SEC Rule 144A, a QIB is generally 

defined as any institution acting for its own 

account, or for the accounts of other QIBs, that in 

the aggregate owns and invests on a discretionary 

basis at least $100 million in securities of issuers 

that are not affiliated with the institution. 

7See Securities Exchange Act Release No. 27956 

(April 27, 1990), 55 FR 18781 (May 4, 1990). 

8See Securities Exchange Act Release No. 58638 

(September 24, 2008), 73 FR 57188 (October 1, 

2008). As part of the separation of NASDAQ from 

FINRA, certain functionality relating to PORTAL, 

including the qualification and designation of 

PORTAL securities, became part of NASDAQ’s 

rules and were eliminated from the NASD rules. 

See Securities Exchange Act Release No. 53128 

(January 13, 2006), 71 FR 3550 (January 23, 2006). 

9 In addition to NASDAQ ceasing operation of the 

PORTAL Market, the Commission has also 

approved the deletion of the Depository Trust 

Company (‘‘DTC’’) requirement that a SEC Rule 

144A security, other than investment grade 

securities, be included in an ‘‘SRO Rule 144A 

System’’ in order to be eligible for DTC’s deposit, 

book-entry delivery, and other depository services. 

See Securities Exchange Act Release No. 59384 

(February 11, 2009), 74 FR 7941 (February 20, 

2009). The PORTAL Market was the only ‘‘SRO Rule 

144A System.’’ Id. 

10Securities Exchange Act Release No. 60991 

(November 12, 2009), 74 FR 60006 (November 19, 

2009). 

11See id. NASDAQ noted in the filing that 

nothing in the proposal was ‘‘intended to impact 

securities previously designated as PORTAL 

securities or alter any existing regulatory obligation 

applicable to such securities, including, but not 

limited to, any trade reporting obligation imposed 

by any self-regulatory organization.’’ Id. 

displayed prices for ETFS Options 

available on other exchanges and, 

thereby, satisfy ISE’s obligation under 

the Options Order Protection and 

Locked/Crossed Market Plan.17 Series of 

the ETFS Options will be subject to 

exchange rules regarding continued 

listing requirements, including 

standards applicable to the underlying 

ETFS Silver and ETF Gold Trusts. 

Shares of the ETFS Silver and ETFS 

Gold Trusts must continue to be traded 

through a national securities exchange 

or through the facilities of a national 

securities association, and must be 

‘‘NMS stock’’ as defined under Rule 600 

of Regulation NMS.18 In addition, the 

underlying shares must continue to be 

available for creation or redemption 

each business day from or through the 

issuer in cash or in kind at a price 

related to net asset value.19 If the ETFS 

Silver or ETFS Gold Trust shares fail to 

meet these requirements, the exchanges 

will not open for trading any new series 

of the respective ETFS Options. 

ISE has represented that it has 

surveillance programs in place for the 

listing and trading of ETFS Options. For 

example, ISE may obtain trading 

information via the ISG from the 

NYMEX related to any financial 

instrument traded there that is based, in 

whole or in part, upon an interest in, or 

performance of, palladium or platinum. 

Additionally, the listing and trading of 

ETFS Options will be subject to the 

exchange’s rules pertaining to position 

and exercise limits 20 and margin.21

III. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,22 that the 

proposed rule change (SR–ISE–2010–19) 

be, and is hereby, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10212 Filed 4–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61979; File No. SR–FINRA– 

2010–003] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change, as Modified by 

Amendment Nos. 1 and 2, Relating to 

Trade Reporting of OTC Equity 

Securities and Restricted Equity 

Securities 

April 23, 2010. 

I. Introduction 

On January 15, 2010, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’ 

or ‘‘SEC’’), pursuant to Section 19(b)(1) 

of the Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change relating to trade 

reporting of OTC Equity Securities and 

certain restricted equity securities. On 

February 5, 2010, FINRA filed 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

modified by Amendment No. 1, was 

published for comment in the Federal 

Register on February 19, 2010.3 The 

Commission received no comment 

letters on the proposed rule change. On 

March 25, 2010, FINRA filed 

Amendment No. 2 to the proposed rule 

change.4 Because Amendment No. 2 is 

technical in nature, the Commission is 

not publishing it for comment. This 

order approves the proposed rule 

change, as modified by Amendment 

Nos. 1 and 2. 

Background 

In 1990, the SEC adopted Rule 144A 

(‘‘SEC Rule 144A’’) under the Securities 

Act of 1933 5 (‘‘Securities Act’’) to 

establish a safe harbor for the private 

resale of ‘‘restricted securities’’ to 

‘‘qualified institutional buyers’’ 

(‘‘QIBs’’).6 At the same time, FINRA 

(formerly known as the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’)) created the PORTAL Market 

to serve as a system for quoting, trading, 

and reporting trades in certain 

designated restricted securities that 

were eligible for resale under SEC Rule 

144A (‘‘PORTAL securities’’).7 In 

September 2008, the NASDAQ Stock 

Market (‘‘NASDAQ’’) ceased the 

operation of the PORTAL Market.8

NASDAQ explained in its rule filing 

that it is taking a minority stake in a 

consortium that will control and operate 

a new electronic platform for handling 

transactions in SEC Rule 144A-eligible 

securities.9 In October 2009, NASDAQ 

filed a proposed rule change with the 

Commission for immediate effectiveness 

terminating NASDAQ’s PORTAL 

security designation process and 

removing rules related to the PORTAL 

Market from its rulebook.10 As a result, 

NASDAQ no longer accepts new 

applications for debt or equity securities 

seeking PORTAL designation.11

In the instant rule proposal, FINRA 

has proposed to delete certain PORTAL 

rules from its rulebook, amend certain 

other rules to address gaps that 

elimination of such PORTAL rules 

would create, amend certain definitions 

to create consistent use of terminology 

in FINRA rules, and make certain other 

clarifying changes. 

III. Description of the Proposal 

Current FINRA Rule 6610 requires 

that members report transactions in 

‘‘OTC Equity Securities’’ to the OTC 


erowe on DSK5CLS3C1PROD with NOTICES
Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 23317 

12See FINRA Rule 6610. 

13See FINRA Rule 6420(c) and (d). 

14See FINRA Rule 6633(a). See also, Notice, 

supra note 3. 

15FINRA Rule 6633(a). The proposed rule change 

is limited in scope to equity securities and would 

not affect the Trade Reporting and Compliance 

Engine Service (‘‘TRACE’’) or the reporting 

requirements with respect to transactions in debt 

securities. See Notice supra note 3. In addition to 

the reporting rules, current FINRA Rule 6635 

specifies which FINRA rules are and are not 

applicable to transactions and business activities 

relating to PORTAL securities. Under the proposal 

FINRA will retain FINRA Rule 6635 as FINRA Rule 

6630 to maintain the status quo with respect to the 

application of FINRA rules to those securities 

designated as PORTAL securities prior to October 

26, 2009. 

16See 17 CFR 230.144. 

17See Notice supra note 3, explaining that the 

ORF reporting session deadline is 8:00 p.m. 

18Rule 600 of Regulation NMS defines ‘‘NMS 

stock’’ as any NMS security other than an option. 

‘‘NMS security’’ is defined as ‘‘any security or class 

of securities for which transaction reports are 

collected, processed, and made available pursuant 

to an effective transaction reporting plan, or an 

effective national market system plan for reporting 

transactions in listed options.’’ See 17 CFR 

242.600(b)(46), 242.600(b)(47). 

19FINRA Rule 6440 (Submission of SEA Rule 

15c2–11 Information on Non-Exchange-Listed 

Securities) and NASD Rule 2320(f), which is often 

referred to as the Three Quote Rule, use the term 

‘‘non-exchange-listed security.’’ Because the 

proposed rule change deletes the term ‘‘nonexchange-listed security’’ from Rule 6420, the 

proposed rule change also amends FINRA Rule 

6440 and NASD Rule 2320(f) to define the term for 

purposes of those rules. The proposed definition in 

each rule is identical to the definition as it appeared 

in FINRA Rule 6420. Consequently, there is no 

change in the application of either rule as a result 

of the proposed rule change. 

20See, e.g., FINRA Rule 6100, 6200, and 6300 

Series. 

21See FINRA Rules 6282(i)(1)(C), 6380A(e)(1)(C), 

6380B(e)(1)(C). 

22The ORF Rules do include an exception for 

transactions in foreign equity securities when the 

transaction is executed on and reported to a foreign 

securities exchange or the transaction is executed 

over-the-counter in a foreign country and is 

reported to the regulator of securities markets for 

that country. See FINRA Rule 6622(g). 

23 In Amendment No. 1, FINRA stated as follows: 

‘‘The proposed rule change eliminates the separate 

definition of ‘‘OTC Equity Security’’ in FINRA Rule 

4560 (Short-Interest Reporting). Currently, the 

PORTAL Rules carve out PORTAL securities from 

the record keeping and reporting requirements of 

Rule 4560. See Rule 6635(d). Consistent with this 

existing exclusion for PORTAL securities, FINRA is 

proposing to amend Rule 4560 to exclude from the 

short-interest record keeping and reporting 

requirements all restricted equity securities, such 

that equity securities that are currently PORTAL 

securities would continue to be excepted from the 

record keeping and reporting requirements as well 

as any other restricted equity securities.’’ 

24See Amendment No. 1. 

25 15 U.S.C. 78o–3(b)(6). 

Reporting Facility (‘‘ORF’’).12 Under the 

current definitions in Rule 6420, 

‘‘restricted securities,’’ as defined by SEC 

Rule 144(a)(3), and securities designated 

in the PORTAL Market are carved out of 

the ORF reporting requirement.13

Transaction reporting for certain of 

these securities to the ORF— 

specifically, restricted equity securities 

that are designated for inclusion in the 

PORTAL Market—is instead required by 

FINRA Rule 6633(a).14

In light of the recent elimination of 

NASDAQ’s PORTAL rules, FINRA has 

proposed to eliminate certain of its 

PORTAL rules.15 However, because 

FINRA has determined that elimination 

of the PORTAL rules that govern 

transaction reporting would create a gap 

in the transaction reporting 

requirements for SEC Rule 144A 

securities, FINRA proposed to amend 

FINRA Rule 6622, to ensure that all 

equity securities that are ‘‘restricted 

securities’’ under Rule 144(a)(3); 16 and 

that are traded pursuant to SEC Rule 

144A, will continue to be reported to 

the ORF. Under the proposal, 

transactions in all restricted equity 

securities effected pursuant to 

Commission Rule 144A would generally 

be required to be reported to the ORF no 

later than 8 p.m. Eastern Time without 

interruption.17 Transactions in 

restricted equity securities effected 

pursuant to Commission Rule 144A and 

executed between 8 p.m. and midnight 

would be required to be reported the 

following business day (T+1) by 8 p.m. 

In addition, FINRA proposed to 

amend the definition of ‘‘OTC Equity 

Security’’ in Rule 6420 to delete the 

reference to securities that ‘‘qualify for 

real-time trade reporting’’ and, instead, 

to define the term as any equity security 

that is not an ‘‘NMS stock’’ as defined by 

the Commission in Regulation NMS.18

The proposed rule change also would 

eliminate the defined term ‘‘nonexchange-listed security’’ from Rule 

6420.19 The effect of these changes is 

that any security or class of securities 

for which transaction reports are 

collected, processed, and made 

available pursuant to an effective 

transaction reporting plan will be 

excluded from the definition of ‘‘OTC 

Equity Security’’ in Rule 6420. 

Further, the proposal would amend 

the ORF rules to address explicitly 

transactions in OTC Equity Securities 

that are executed on an exchange. 

FINRA’s trade reporting rules 

historically have been limited to only 

trades executed ‘‘otherwise than on an 

exchange.’’ 20 As explained in the 

Notice, the FINRA/NASDAQ TRF Rules, 

the FINRA/NYSE TRF Rules, and the 

ADF Rules all include an exception 

from the reporting obligations for 

transactions reported on or through an 

exchange.21 These rules collectively 

provide for the submission of trade 

reports to FINRA for transactions in 

NMS stocks only if the transaction is 

executed over-the-counter. FINRA Rule 

6622, which governs the submission of 

transaction reports to the ORF for 

transactions in OTC Equity Securities, 

does not include a similar exception for 

transactions in otherwise eligible 

securities that are reported on or 

through an exchange.22 Thus, FINRA 

proposed to amend Rule 6622 to include 

an explicit exception for transactions in 

OTC Equity Securities reported on or 

through an exchange, and to amend 

Rule 6420(k) and Rule 6610 to clarify 

further that transactions in OTC Equity 

Securities must be reported to the ORF 

where such transactions are executed 

otherwise than on or through an 

exchange. 

FINRA also proposed to conform the 

definition of ‘‘OTC equity security’’ in 

Rule 7410 of the OATS rules to the 

proposed definition in Rule 6420 and 

explained that the proposed change will 

not result in any change to the scope of 

securities required to be reported to 

OATS. FINRA similarly proposed to 

eliminate the separate definition of 

‘‘OTC Equity Security’’ in FINRA Rule 

4560 (Short-Interest Reporting),23

explaining that the proposal would 

‘‘exclude from the short-interest record 

keeping and reporting requirements all 

restricted equity securities, such that 

equity securities that are currently 

PORTAL securities would continue to 

be excepted from the record keeping 

and reporting requirements as well as 

any other restricted equity securities.’’ 24

As stated in the Notice, FINRA 

represented that it will announce the 

effective date of the proposed rule 

change in a Regulatory Notice to be 

published no later than 60 days 

following Commission approval. The 

effective date will be 30 days following 

publication of the Regulatory Notice 

announcing Commission approval. 

IV. Discussion and Commission’s 

Findings 

The Commission has reviewed 

carefully the proposed rule change and 

finds that the proposal is consistent 

with the Act and the rules and 

regulations thereunder applicable to a 

national securities association, 

including the provisions of Section 

15A(b)(6) of the Act,25 which requires, 

among other things, that FINRA rules be 

designed to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

transactions in securities, and, in 


erowe on DSK5CLS3C1PROD with NOTICES
23318 Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 

26 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition and capital 

formation. See 15 U.S.C. 78c(f). 

27 17 CFR 200.30–3(a)(12). 

general, to protect investors and the 

public interest.26

The proposed rule change is intended 

to address the cessation of the PORTAL 

market and clarify the scope of the ORF 

Rules, as well as make conforming 

changes to other FINRA Rules. The 

Commission believes that the proposed 

rule change is reasonably designed to 

ensure that FINRA will continue to 

receive important transaction 

information with respect to securities 

that are traded over-the-counter. In 

addition, the Commission believes that 

the amended definition ‘‘OTC Equity 

Security,’’ the standardization of that 

definition throughout FINRA rules and 

FINRA’s other proposed changes will 

close gaps and add clarity with respect 

to the application of specified FINRA 

rules to certain securities. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (SR–FINRA– 

2010–003), as modified by Amendment 

Nos. 1 and 2, be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10252 Filed 4–30–10; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 6983] 

Culturally Significant Objects Imported 

for Exhibition Determinations: ‘‘John 

Baldessari: Pure Beauty’’ 

SUMMARY: Notice is hereby given of the 

following determinations: Pursuant to 

the authority vested in me by the Act of 

October 19, 1965 (79 Stat. 985; 22 U.S.C. 

2459), Executive Order 12047 of March 

27, 1978, the Foreign Affairs Reform and 

Restructuring Act of 1998 (112 Stat. 

2681, et seq.; 22 U.S.C. 6501 note, et 

seq.), Delegation of Authority No. 234 of 

October 1, 1999, Delegation of Authority 

No. 236 of October 19, 1999, as 

amended, and Delegation of Authority 

No. 257 of April 15, 2003 [68 FR 19875], 

I hereby determine that the objects to be 

included in the exhibition ‘‘John 

Baldessari: Pure Beauty,’’ imported from 

abroad for temporary exhibition within 

the United States, are of cultural 

significance. The objects are imported 

pursuant to loan agreements with the 

foreign owners or custodians. I also 

determine that the exhibition or display 

of the exhibit objects at the Los Angeles 

County Museum of Art, Los Angeles, 

CA, from on or about June 27 2010, until 

on or about September 12, 2010; at the 

Metropolitan Museum of Art, New York, 

NY, from on or about October 18, 2010, 

until on or about January 9, 2011, and 

at possible additional exhibitions or 

venues yet to be determined, is in the 

national interest. Public Notice of these 

Determinations is ordered to be 

published in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: For 

further information, including a list of 

the exhibit objects, contact Carol B. 

Epstein, Attorney-Adviser, Office of the 

Legal Adviser, U.S. Department of State 

(telephone: 202–632–6473). The address 

is U.S. Department of State, SA–5, L/PD, 

Fifth Floor, Washington, DC 20522– 

0505. 

Dated: April 27, 2010. 

Maura M. Pally, 

Deputy Assistant Secretary for Professional 

and Cultural Exchanges, Bureau of 

Educational and Cultural Affairs, Department 

of State. 

[FR Doc. 2010–10255 Filed 4–30–10; 8:45 am] 

BILLING CODE 4710–05–P 

OFFICE OF THE UNITED STATES 

TRADE REPRESENTATIVE 

[Docket No. WTO/DS403] 

WTO Dispute Settlement Proceeding 

Regarding Philippines—Taxes on 

Distilled Spirits 

AGENCY: Office of the United States 

Trade Representative. 

ACTION: Notice; request for comments. 

SUMMARY: The Office of the United 

States Trade Representative (‘‘USTR’’) is 

providing notice that on March 29, 

2010, the United States requested 

establishment of a dispute settlement 

panel under the Marrakesh Agreement 

Establishing the World Trade 

Organization (‘‘WTO Agreement’’) with 

respect to the taxation of imported 

distilled spirits in the Philippines. That 

request may be found at http:// 

www.wto.org in a document designated 

as WT/DS403/4. The panel was 

established by the World Trade 

Organization (‘‘WTO’’) Dispute 

Settlement Body on April 20, 2010. 

USTR invites written comments from 

the public concerning the issues raised 

in this dispute. 

DATES: Although USTR will accept any 

comments received during the course of 

the dispute settlement proceedings, 

comments should be submitted on or 

before June 2, 2010 to be assured of 

timely consideration by USTR. 

ADDRESSES: Public comments should be 

submitted electronically to http:// 

www.regulations.gov, docket number 

USTR–2010–0005. If you are unable to 

provide submissions by http:// 

www.regulations.gov, please contact 

Sandy McKinzy at (202) 395–9483 to 

arrange for an alternative method of 

transmission. If (as explained below) the 

comment contains confidential 

information, then the comment should 

be submitted by fax only to Sandy 

McKinzy at (202) 395–3640. 

FOR FURTHER INFORMATION CONTACT: 

Courtney E. Smothers, Associate 

General Counsel, Office of the United 

States Trade Representative, 600 17th 

Street, NW., Washington, DC 20508, 

(202) 395–5657. 

SUPPLEMENTARY INFORMATION: Section 

127(b) of the Uruguay Round 

Agreements Act (URAA) (19 U.S.C. 

2527(b)(1)) requires that notice and 

opportunity for comment be provided 

after the United States submits or 

receives a request for establishment of a 

WTO dispute settlement panel. 

Consistent with this obligation, USTR is 

providing notice that it requested a 

panel and the panel has been 

established pursuant to the WTO 

Understanding on Rules and Procedures 

Governing the Settlement of Disputes 

(‘‘DSU’’). The panel will hold its 

meetings in Geneva, Switzerland, and 

would be expected to issue a report on 

its findings and recommendations 

within nine months after it is 

established. 

Major Issues Raised by the United 

States 

The United States has raised concerns 

with the Philippines over taxation of 

distilled spirits many times over the 

past several years, both bilaterally and 

in WTO forums. On January 14, 2010, 

the United States requested 

consultations regarding this issue. The 

Philippines taxes distilled spirits at 

rates that differ depending on the 

product from which the spirit is 

distilled. The Philippines taxes distilled 

spirits made from certain materials that 

are typically produced in the 

Philippines, such as cane sugar and 

palm, at a low rate (e.g. 13.59 pesos per 

proof liter in 2009). Other distilled 

spirits are taxed at significantly higher 

rates (from approximately ten to forty 

times higher) than the low rate applied 

to domestic products. The Philippines’ 

taxes on distilled spirits appear not to 

tax similarly imported distilled spirits 


erowe on DSK5CLS3C1PROD with NOTICES